Foreign Relations of the United States, 1958–1960, Indonesia, Volume XVII

234. National Intelligence Estimate⁰

NIE 65–2–59

Washington, December 8, 1959.

THE PROSPECTS FOR INDONESIA

The Problem

To analyze the present situation and trends in Indonesia and to estimate probable developments over the next two years.

Conclusions

1. The economic deterioration of Indonesia continues and the internal political situation holds little prospect for stability and progress. President Sukarno, the army, and the Indonesian Communist Party (PKI) remain the major political forces. Sukarno remains the dominant political figure and has, by becoming Prime Minister, for the first time committed his personal prestige to the government’s performance. However, we do not believe he will give the continuous and effective leadership the situation calls for. (Paras. 28–29)

2. The army, under General Nasution, has greatly increased its role in politics and national administration and has taken some steps to restrict Communist activities. The PKI will probably find it increasingly difficult to follow its past policy of full support of Sukarno and the government, in view of Sukarno’s efforts to reduce the power of political parties, army harassment, and the current tension between Indonesia and Communist China. (Paras. 30–32)

3. We do not believe that there will be any drastic rearrangement of political forces during the next year or so. Sukarno will probably remain the key figure. The army will probably maintain a strong position in national political and economic affairs. The antagonism between the army and the Communists will probably become more acute. However, we believe that both the army and the Communists will seek to avoid a showdown, and that Sukarno will be careful to avoid creating situations which might provoke one. (Paras. 28–32)

4. The military stalemate in the rebellion in Sumatra and Celebes will probably continue and a negotiated settlement appears unlikely. (Para. 38)

5. Indonesia will almost certainly adhere to its policy of nonalignment. Relations with the Dutch will remain near the breaking point; an attempt to seize West New Guinea by force is unlikely. Relations with most of the Communist Bloc will probably remain cordial. However, the present strain in relations with Communist China could become acute if Peiping continues its intransigent and overbearing attitude on the overseas Chinese issue and pursues its intervention into what Indonesians consider an internal affair. Indonesian relations with the US and the West will probably improve within the limits of a neutralist policy with an anticolonial twist. (Paras. 42–45)

6. We believe Indonesia’s numerous and interlocking political, economic, administrative, and internal security problems are likely to persist and possibly intensify but without bringing the country to the point of collapse or disintegration during the period of this estimate. However, there are a number of possible developments which could precipitate a major crisis, particularly the death of Sukarno, a disruption of the power balance maintained by Sukarno between the army and the PKI, or a serious economic reverse, such as a drastic decline in the price of Indonesia’s export commodities. (Para. 27)

[Here follow an analysis of the current situation in Indonesia, an analysis of the outlook, and a 3-page appendix analyzing the Indonesian military establishment; see Supplement.]

0. Source: Department of State, INR–NIE Files. Secret. According to a note on the cover sheet, this NIE was prepared by the CIA and the intelligence organizations of the Departments of State, the Army, Navy, Air Force, and the Joint Staff. All members of the IAC concurred with this estimate on December 8, except the representatives of the AEC and the FBI, who abstained on the grounds that the subject was outside their jurisdiction.